Apple profit falls for first time in nearly a decade (Update)

Apr 23, 2013 by Glenn Chapman

The Apple logo is displayed on the exterior of an Apple Store on April 23, 2013 in San Francisco, California. Apple on Tuesday reported that its quarterly profit had dipped for the first time in nearly a decade despite a rise in revenue from the same period a year earlier.

Apple reported Tuesday that its quarterly profit dipped for the first time in nearly a decade as it squeezed less money from its champions in the competitive smartphone and tablet markets.

The maker of iPhones, iPads, iPods, and Macintosh computers stepped in to bolster its stock price by announcing a plan to more than double to $100 billion the amount it will spend to buy back its stock and pay out dividends.

Apple raised a coming stock dividend by 15 percent to $3.05 per common share.

While Apple coffers bulged with $144.7 billion, the company said most of that money is offshore and it will be shrewder to borrow cash to implement the stock buy-back plan.

"We will fund the capital return program from operations and borrowing," said Peter Oppenheimer, Apple's chief financial officer.

Apple shares jumped briefly on the news in after-hours trades but slid back down to $403.95, about two dollars below where it was at the close of the Nasdaq.

"They bought themselves some extra time," Silicon Valley analyst Rob Enderle said of Apple tapping into its cash reserves to pay off investors.

"They are basically selling off Apple's future to prop up Apple's stock price in the short term."

The move veers from the way late Apple co-founder Steve Jobs fiercely guarded cash reserves.

Apple shares jumped briefly on the news in after-hours trades but slid back down to $403.95, about two dollars less than at the close of the Nasdaq.

The California-based company posted a profit of $9.5 billion on revenue of $43.6 billion in the first three months of this year, compared to a profit of $11.6 billion on $39.2 billion in the same quarter in 2012.

It said its gross margin, or the amount of money it makes in profit from its devices, shrank to 37.5 percent from 47.5 percent.

The number of iPhones sold in the quarter rose to 37.4 million from 35.1 million during the same quarter last year.

The number of iPads sold surged to 19.5 million from 11.8 million a year earlier.

Meanwhile, sales of iPod MP3 players dropped by more than a million to 5.6 million and Macintosh computers sales slipped about two percent to just below four million, according to Oppenheimer.

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User comments : 3

That big cash stash Apple is hoarding outside the US taxman's reach represents both greed and fear. Their greed prompts them to not belly up to the bar and pay their fair share of the tax burden. Their fear is based on their lack of confidence on their ability to produce another killer product.

They lack the ability to wisely invest a large chunk of that mountain of money in research and development. H.L. Hunt once said "Money is like cow shit. If it sits in one big pile, it stinks. If it's spread around, it makes thing grow."

I hope this is more because their design philosophy is finally losing the battle against reality. They tend to make function follow form to the point of non-functionality. If they designed a car, it wouldn't have door handles. Because, of course, door handles are too "clunky".

Keeping assets away from the imploding G5 nations is Apple's only laudable achievement. The G5 have no claim to that money because the world is now a larger place than the loser Rothschild funny-money bankster nations

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